Urban Growth Shadows

November 18, 2019
By David Cuberes, Klaus Desmet, and Jordan Rappaport, Senior Economist

Research Working PaperAlthough locations near metropolitan areas have experienced faster population growth since 1920, this growth has diminished since 2000, suggesting the largest metropolitan areas will grow more slowly over coming decades.

Does a location's growth benefit or suffer from being geographically close to large economic centers? Spatial proximity may lead to competition and hurt growth, but it may also generate positive spillovers and enhance growth. Using data on U.S. counties and metro areas for the period 1840–2017, we document this tradeoff between urban shadows and urban spillovers. Proximity to large urban centers was negatively associated with growth from 1840 to 1920, and positively associated with growth after 1920. Using a two-city spatial equilibrium model with intra-city and inter-city commuting, we show that the secular evolution of commuting costs can account for this and other observed patterns in the data.

Download paper

RWP 19-08, November 2019; Revised July 2020

JEL Classification: R12, N93

Article Citation

  • Cuberes, David, Klaus Desmet, and Jordan Rappaport. 2019. “Urban Growth Shadows.” Federal Reserve Bank of Kansas City, Research Working Paper no. 19-08, November. Available at https://doi.org/10.18651/RWP2019-08

Related Research